The use of AI infrastructure, strong demand for defense, and growing manufacturing activity have all helped push the industrial sector this year. Benchmark Industrial Select Sector SPDR Fund NYSEARCA: XLIwhich tracks the broad S&P index of major industrial companies, has returned more than 16% year-to-date (YTD), making it one of the best-performing sector-specific funds over that period. While industrial names may not have the luster of some of the big tech stocks driving the overall market performance, there is still plenty of room for growth for those willing to lean on the industrial sector a bit in H2.
Sector-wide investing through an exchange-traded fund (ETF) like XLI can be a great way to do just that. XLI's expense ratio of 0.08% makes it among the cheapest ETFs that offer exposure to industry names, and it has strong trading volume and assets under management (AUM). For investors looking for a unique strategy, there are a number of alternatives that can deliver competitive returns, including the funds below.
Another Cheap Option with a Wider Portfolio
Vanguard Industrials ETF today
Company Vanguard Industrials ETF
As of 07/7/2026 04:10 PM Eastern
- 52 week interval
- $281.74
▼
$362.21
- Dividend Yield
- 0.88%
- Assets Under Administration
- $8.52 billion
Rating of the company Vanguard Industrials ETF NYSEARCA: VIS it takes a broader approach than XLI because it includes companies of different capital markets in its portfolio. In total, there are about 400 holding points in the VIS basket, several times the number the XLI holds. Although VIS has a deep list of positions, it focuses respectably on a small number of individual names—the largest holdings, of companies such as Caterpillar Inc. NYSE: CAT and GE Aerospace NYSE: GErepresent approximately 5.8% of each portfolio.
Another consideration to keep in mind is that VIS has a much lower AUM and average trading volume than XLI. This may make VIS less attractive to particularly active traders, although as a Vanguard fund, it may be to the advantage of Vanguard account holders to invest in this ETF. VIS has a competitive expense ratio of 0.09%, making it one of the cheapest industry funds available today.
In terms of performance, VIS has an XLI rhythm in 2026: the fund has returned 18% YTD. Its average yield of 0.89% may also help convince investors on the fence about the fund's lower trading volume or asset base relative to the more popular XLI.
The Momentum Strategy Pays Off, But at a High Cost
Invesco Dorsey Wright Industrials Momentum ETF today
Company Invesco Dorsey Wright Industrials Momentum ETF
As of 07/7/2026 04:00 PM Eastern
- 52 week interval
- $154.67
▼
$262.73
- Dividend Yield
- 0.09%
- Assets Under Administration
- $454.56 million
Factor strategies remain a popular option for ETF investors, and a fund like the Invesco Dorsey Wright Industrials Momentum ETF NASDAQ: PRN combines a sector focus with a momentum screen to provide a targeted view of a particular corner of the market. PRN tracks an index consisting of at least 30 industrial stocks selected based on relative strength compared to others in the sector; the fund currently holds more than that, with a total of 44 positions.
What this means for investors is that the PRN portfolio has a greater spread across the market cap spectrum than many other sector funds that tend to focus only on large companies. While large caps make up the majority of the basket, PRN also has a large portion of mid-cap and small-cap companies. The lowest price of shares of Comfort Systems USA Inc. NYSE: CORRECTit has returned almost 80% YTD.
The dynamic play was active in 2026: PRN returned more than 30% YTD, outperforming the funds above. On the other hand, its asset base and trading volume is much smaller than that of an ETF like XLI, and the fund has a much higher expense ratio of 0.60%.
A Small Scale Strategy for Risk Tolerant Investors
Invesco S&P SmallCap Industrials ETF today
Company Invesco S&P SmallCap Industrials ETF
As of 07/7/2026 03:35 PM Eastern
- 52 week interval
- $136.18
▼
$186.90
- Dividend Yield
- 1.33%
- Assets Under Administration
- $188.11 million
Another way for a sector like industrials is to target an often-overlooked part of the space with a small-cap fund like the Invesco S&P SmallCap Industrials ETF. NASDAQ: PSCI. Small-cap stocks, like those in many other sectors, tend to exhibit higher volatility and can often be a higher-risk, higher-reward business than their larger, more stable peers. For PSCI, this means a basket of 90 companies that may be unfamiliar to most investors.
The advantage of PSCI is that this diversification (and the fact that no single position accounts for more than 3.2% of the total portfolio) can help reduce the risk inherent in the small-cap niche. When the sector is doing well overall, small caps can outperform even the best—the PSCI has returned nearly 20% YTD. With an annual fee of 0.29%, the fund is much cheaper than others like PRN, too. However, PSCI also has the lowest trading volume of any fund on this list, so investors should be aware of potential liquidity constraints.
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